BIRMINGHAM, Alabama -- The Volkswagen Group has created a U.S. purchasing group based in Chattanooga, Tennessee, to meet a demanding local-content target for its U.S.-built sedans.
The group will operate with help from VW's North American purchasing group in Puebla, Mexico, but will make independent decisions on parts sourcing, said Don Jackson, president of manufacturing for Volkswagen Group of America. He spoke here last week at the Automotive News Manufacturing Conference.
"We're really looking at a clean slate," Jackson said of the purchasing plans for the Tennessee project and whether they would differ from Volkswagen in Mexico. "We're looking at new terms and conditions."
Volkswagen is constructing a $1 billion assembly plant in Chattanooga to produce an as-yet unnamed mid-sized sedan in 2011 that will contain up to 80 percent North American content.
That 80 percent target is "very challenging for a startup," Jackson acknowledged.
Some of Honda Motor Co.'s North America-made vehicles contain roughly that level of local content. But Honda makes its own engines, transmissions, crankshafts and other critical components in the United States after more than 25 years here.
Volkswagen will rely on engines from Mexico and Germany.
The new Chattanooga purchasing team already has about 75 employees. Final approval on sourcing will come from Volkswagen program managers in Wolfsburg, Germany, where the new sedan is being developed.
Jackson said that because the Chattanooga car will be sold only in the United States, VW will have an opportunity to source some content that is unique to the U.S. market.